The irony of the personal computer revolution is that the PC itself
didn’t create the initial spark—it was the software spreadsheet.
When VisiCalc, the first low-cost spreadsheet software, appeared in
1979, it immediately appealed to Wall Street analysts who were sick
and tired of recalculating spreadsheet after spreadsheet on paper. They
cheerfully shelled out more than $2,500 apiece to buy VisiCalc and an
Apple II personal computer simply to be able to reduce the time and
tedium associated with the manual approach. Within five years of the
introduction of VisiCalc, more than 1 million software spreadsheets (and
the computers needed to run them) were being sold annually. Within a
decade, North America’s financial culture had become a spreadsheet
culture. Spreadsheets became the medium, the method, the tool and the
language of all serious financial analysis.
But VisiCalc’s brilliance transcended automation. The same technology
that slashed hours from budget recalculations also enabled its users
to build alternate spreadsheet realities cheaply. Indeed, low-cost
spreadsheet software effectively launched the largest and most significant
experiment in rapid prototyping and simulation in the history of
business. The culture of finance had never seen a tool like it. Financial
models that had once cost thousands of dollars to design and build
now cost thousandths of a penny. The marginal cost of modifying complex
spreadsheet models plummeted to near zero.
The spreadsheet is just one example of how the computational costs
of prototyping products, simulating services and modeling business
options are shrinking into insignificance. It’s becoming ever easier,
cheaper and faster to explore new ideas.
Prototypes like the spreadsheet engage the organization’s thinking
in the explicit. They externalize thought and spark conversation. A
truly effective physical prototype of a personal computer or an
automobile dashboard goes beyond the visual to appeal to the tactile and the
kinesthetic. A genuinely creative spreadsheet simulation of a budget
crisis evokes a “suspension of disbelief” that activates the
adrenal glands along with the mind. The conversational competitions and
design debates that these shared models ignite forge collaborative
creativity and fire innovation.
Consequently, these models are not just tools for individual
thought. They are inherently social tools and mechanisms for collaboration.
Models and the human interactions and conversations that go on around
them cannot be arbitrarily divorced. There is an ecological dynamic
between interaction and iteration: New interactions lead to new
iterations, and new iterations lead, in turn, to new interactions. Models turn
out to be more about mediating interactions between people than
mediating interaction between information.
That means translating the different languages of modeling in a
company into one that everyone can understand. For example,
finance-trained MBAs are typically far more comfortable manipulating spreadsheet
simulations than are liberal-arts-trained salespeople. What kinds of
conversations help bridge those gaps? Who manages them?
These questions become even more important as modeling within
companies becomes more democratic and widespread. For example, engineering
organizations have found that nonengineering managers and marketers
want to play with CAD software to test their own product ideas and
enhancements. Such “amateur CAD” signifies a growing
democratization of design promoted by pervasive and accessible modeling technology.
The changing nature of the modeling medium is forcing design
professionals to manage the prototyping efforts of design amateurs. The
declining cost and rising importance of prototyping is broadening the
community of designers.
As this community continues to broaden, what should be the goal that
unites it? Many companies have latched onto speed-to-market as the
primary payback for a fluid, rapid prototyping culture. But the mantra
that speeding innovations to market is the key to competitiveness is
dangerously misleading. High-tech companies and innovators who redesign
themselves around that belief may be rapidly accelerating down the
wrong side of the innovation speedway.
Speed-to-market might well be the most misunderstood management
metric around. It’s true that most companies, from Boeing and Chrysler to
Intel and Cisco, reap competitive advantage by slashing months from
product-development cycles. But that’s unlikely to be the real reason
they’re leaders in rapid innovation. The innovation metric that matters most
in a hypercompetitive and volatile marketplace measures a different
kind of speed; its focus is the needs of customers and clients rather than
the speed of the innovator. The single variable that customers and
clients care most about is their own mean-time-to-payback—the speed
at which they believe they will get payback from purchasing a product
The customer’s perceived mean-time-to-payback, not the innovator’s
speed-to-market, effectively determines which innovations will dominate
a market. The faster the payback, the better the chance that an
innovation can create a meaningful market for itself. No other metric is
more important. Indeed, the business history of the digital innovation
is a story of ever-accelerating mean-time-to-payback for people who
purchase silicon and software. Dan Bricklin, cocreator of VisiCalc,
attributes the success of the spreadsheet that launched the PC revolution
to the financial analysts who believed that the system paid for itself
in under a week.
Companies must develop internal metrics for their prototyping
processes that reflect their particular customers’ mean-time-to-payback
expectations. For example, Swedish low-cost furniture maker Ikea
calculates the manufacturing costs of its furniture prototypes down to a
fraction of a krona: Cost-to-build is explicitly defined as Ikea’s single
most important criterion, because customers have come to expect prices
to be as low as possible. Ikea customers have grown comfortable with
assembling the furniture themselves as part of that bargain. At
Steelcase’s New York City prototyping showroom, customers’ length of visit
was identified as a telling gauge of their interest in Steelcase
systems. World-class companies whose designs differentiate them are careful
to use mission-critical measures in their prototyping processes.
Outside the marketplace itself, there is no better way to gain
insight into individual and organizational behavior and to promote
value-creating behavior than through the use of prototypes. They will become
an ever more important investment in the quality of an organization’s
human capital and its innovation capacity. The smartest, most creative
people in innovative organizations already spend more time interacting
with more versions of models of their most important products and
services than ever before. Tomorrow, they will spend even more time. But
will that time be spent more productively? How will they—and